U.S. stocks plunged Thursday, a day after a powerful post-election rally, as investors dumped technology shares amid fears that Democrats' sweeping midterm victories would slow the artificial-intelligence infrastructure boom.
The S&P 500 sank more than 3 percent during morning trading, putting it on pace for its worst day since the April 2025 selloff following President Trump's announcement of sweeping tariffs. The Dow Jones Industrial Average shed more than 1,000 points, surrendering more than half of Wednesday's advance.
Technology shares led the retreat. The Nasdaq Composite fell roughly 4 percent to 5 percent, trading more than 10 percent below its October record close. A close below that threshold would confirm the index's second correction this year. The Nasdaq 100, which tracks the largest nonfinancial companies listed on the exchange, fell as much as 6.24 percent.
Within the S&P 500, technology led the decline, falling about 5.1 percent, while consumer discretionary dropped roughly 4 percent. Industrials fell about 2.2 percent, materials 1.9 percent, and communication services 1.8 percent. Financials lost 1.8 percent and real estate slipped 1.4 percent. By contrast, defensive pockets held up better: energy rose about 0.6 percent and consumer staples gained roughly 0.3 percent, while utilities and health care were nearly flat to modestly lower. Only two of the index's 11 sectors were higher, underscoring a rotation away from the artificial-intelligence infrastructure complex toward more stable areas of the market.
Some of this year's most popular AI trades suffered the sharpest losses as investors reassessed companies whose growth depends on continued spending on chips, computing capacity and data-center equipment.
Nvidia and Broadcom each fell about 9 percent, as did Oracle. The iShares Semiconductor ETF dropped more than 11 percent. Tesla and SpaceX each lost about 10 percent.
Companies that rent out AI computing capacity also plunged. CoreWeave fell about 14 percent, Nebius slid 17 percent, and IREN shed 19 percent, extending losses from Wednesday.
Qualcomm dropped about 13 percent after its quarterly earnings beat analysts' estimates but its earnings outlook disappointed. Revenue from its smartphone-chip business fell 26 percent to $5.14 billion, missing Wall Street expectations.
The election results added a political obstacle to an industry already facing questions about the cost of its expansion. Democrats secured majorities in both the House and Senate and captured key governorships, raising the prospect of tighter scrutiny and restrictions on new data centers.
Texas emerged as a particular concern. Democrat Gina Hinojosa, who defeated Republican Gov. Greg Abbott, campaigned for an immediate moratorium on data-center development. Developers in the state were already contending with a suspension of approvals under Abbott.
Data center-related measures appeared on ballots in at least 41 jurisdictions across 10 states, and voters approved moratoriums or restrictions in 40 of those. This is one of the clearest signs that the midterm elections were in fact the "AI election."
Dan Ives, a technology analyst at Yorkville Ives, estimated that roughly 10 percent of planned U.S. data centers "will not happen now." He said Texas accounts for roughly 25 percent to 30 percent of expected data-center capacity.
Democratic blue tidal wave across the Senate and House was a seismic shift that will have a negative impact on the pace of the AI Revolution buildout in the US over the next few years. Will slow the pace of the planned 800 to 1,000 datacenters across the US fueling the AI…
— Dan Ives (@DivesTech) November 4, 2026
UBS analysts separately estimated that potential construction pauses could put about 30 percent of expected U.S. data-center capacity additions in 2028 at risk.
Slower construction could reduce orders for semiconductors, servers, cooling systems and power equipment, spreading the effects across businesses that have expanded to meet demand from the AI industry.
Thursday's plunge marked a sharp reversal of the broader market's initial response to the election. The Dow surged more than 1,500 points Wednesday, while the S&P 500 and Nasdaq each gained more than 1 percent.
Several large technology companies rallied Wednesday as investors bet that slower construction could ease pressure on their cash flows and increase the value of existing facilities by limiting competing supply. Chipmakers and smaller data-center companies fell even during that rally.
By Thursday morning, the selling had reached the cloud giants themselves, with Amazon and Alphabet also trading lower.
The political uncertainty compounded longer-running concerns about the returns on massive AI investments. The largest cloud computing companies have committed hundreds of billions of dollars to data centers, chips and power projects, increasingly turning to debt markets to help finance the spending.
The stock declines came despite encouraging economic news. Weekly applications for unemployment benefits fell below every forecast in a survey of economists. Investors next face Friday's monthly employment report.
European stock indexes held up better than their U.S. counterparts following Wednesday's steep decline in oil prices. Oil recovered some ground Thursday, with U.S. crude trading around $90 a barrel and Brent near $97.
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